European weapons companies saw a significant rise in share prices on Monday as market investors anticipated higher defense budgets following efforts by the UK and France to broker a peace deal in Ukraine. BAE Systems, Rheinmetall, Thales, and Leonardo notably surged 17%, 14%, 16%, and 10%, respectively. This increase reflects fears surrounding potential US withdrawal of military support under President Trump's administration. Key leaders, including Keir Starmer and Emmanuel Macron, convened in London to discuss the peace initiative, emphasizing the urgent need for enhanced defense spending in Europe, particularly in Germany.
Britain's BAE Systems rose by as much as 17% on Monday morning, Germany's Rheinmetall gained 14%, France's Thales increased 16%, and Italy's Leonardo was up 10% in early trading.
Keir Starmer on Sunday said Europe is at a crossroads in history as he hosted a summit in London with Zelenskyy and 18 other leaders, including France's Emmanuel Macron.
Holger Schmieding, an economist at Berenberg, stated that Europe and Germany in particular must and very likely will raise defence spending for themselves and for Ukraine beyond recent plans.
The prospect of the US withdrawing its support has made politicians in Europe pay attention, pushing for an increase in defence budgets in response to geopolitical tensions.
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